September 14, 2017 / 2:55 PM / 2 years ago

EBRD considers taking stakes in more Belarus banks

MINSK (Reuters) - The European Bank for Reconstruction and Development (EBRD) is considering taking equity stakes in more banks in Belarus as part of its efforts to help the state open up its economy, EBRD President Suma Chakrabarti said.

EBRD President Suma Chakrabarti addresses an audience during the Annual Meeting and Business Forum of European Bank for Reconstruction and Development's (EBRD) in Nicosia, Cyprus May 11,2017. REUTERS/Yiannis Kourtoglou

This week the EBRD agreed to loan 50 million euros ($59.4 million) to Belarusian state lender Belinvestbank to boost its capital in preparation for privatization.

In 2015, the EBRD agreed to buy around 25 percent of the bank, one of the five largest in Belarus, to help attract an investor for the state’s stake in the lender.

Chakrabarti said that the EBRD has yet to decide whether it will convert a subordinated loan it agreed to provide to Belinvest into equity or buy the stake separately.

“The Moscow Minsk Bank is another one which we are interested to take forward – Moscow Minsk is already more commercially run anyway, this may be a quicker process,” Chakrabarti told Reuters.

“And then we are looking at (the state’s stake in) Priorbank and also some state-owned Belarussian banks.”

The government of Belarus owns a minority stake in Priorbank, while 87.7 percent belongs to Raiffeisen Bank. Moscow Minsk Bank is almost 100 percent owned by the central bank.

Belinvest’s loan portfolio stood at $1 billion at the end of the first quarter, of which non-performing loans accounted for $140 million. Out of these $140 million, some $100 million were for state companies.

Under the agreement with the EBRD, the bank has to restructure around $60 million in non-performing loans.

The final size of the stake the EBRD would take in Belinvest is yet to be decided, Chakrabarti said, but it will be below one third. He confirmed a previous plan to find a strategic investor for Belinvest in 2020.

In the Moscow Minsk Bank EBRD would also consider taking a stake of less than a third, he said.


Chakrabarti, who visited Azerbaijan last week, said that the EBRD was “ready to help” with the changes the Azeri banking sector is going through.

The International Bank of Azerbaijan (IBA), the country’s largest bank, is undertaking a $3.3 billion debt restructuring.

“I was there last week, we spoke to the (Azeri) president (Ilham Aliyev), we said we would be happy to help in restructuring and refocusing of this bank,” Chakrabarti said.

He added that the key for the EBRD to seriously consider becoming a shareholder in IBA would be a “corporate governance reform” at the bank. The EBRD was unlikely to become a shareholder with IBA as early as this year.

“It’s very unlikely this year – they need to go through the restructuring process. We said: lets see how you go and we are happy to be involved at a technical assistance level but for the equity stake we really have to see how things have been changing.”

Chakrabarti added that the EBRD was aiming to restart lending to Uzbekistan this year, distributing one or two credit facilities for the banking sector, which, in turn, would use the funds for loans to the small and medium size businesses.

“We are also developing a pipeline of projects in infrastructure, energy sector but they will take longer, as usual,” he said.

Additional reporting by Andrey Makhovsky; Editing by Keith Weir

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